Overview of EDI

eCom is the GS1 term for Electronic Data Interchange, or EDI as it is commonly referred to. EDI is the computer-to-computer exchange of standard business documents in electronic format between two companies. It simply replaces paper-based documents with electronic documents. The sending company creates the electronic message and the receiving company interprets the message - without the need for any human involvement.

GS1 Standards in EDIThe two key concepts of EDI are:

  • Electronic documents replace paper based ones
  • The exchange of documents takes place in a standardised format

GS1 Ireland allocates directly to a company engaged in EDI, a GLN for mailbox identification. The company may use this number as the primary company identification within the message itself. Using these two basic concepts, any business can implement EDI and take advantage of its speed, accuracy, efficiency and cost savings.

GS1 eCom provides globally agreed standard definitions for a wide range of electronic business messages, including:

  • Invoice
  • Purchase order
  • Despatch advice
  • Receipt advice

GS1 eCom is an enabler for automating many important business processes, such as order-to-cash, planning, forecasting and reporting.

Implementing E-Commerce is a significant undertaking for any business. It affects relationships between customers and suppliers. It has an impact on how your internal processes work and impacts your IT applications. In Ireland, E-Commerce has been implemented on a community basis where organisations come together and decide that best options for the community. GS1 has forested and facilitated these communities. As a community, the following tasks are addressed

  • Business Process - selecting the process to be addressed Invoicing or Order Processing
  • Standards Selections –selecting the best options and preparing requirements specifications for the selected business processes
  • Communications – analysis of the communications options and selection of service providers
  • Software –you have to consider how the E-Commerce will be managed and integrated with your existing IT applications
  • Development and Testing – there will be some development and certainly some testing to be carried out. Testing should focus not only at validating the process but gaining organisational support among the process owners.

EDI provides trading partners with an efficient business tool for the automatic transmission of commercial data from one computer application directly to another. Companies do not need to worry about different incompatible computer systems. Through the use of GS1 EDI message standards, data may be communicated quickly, efficiently and accurately irrespective of users internal hardware and software types.

The successful implementation of EDI provides major benefits for a company and its trading partners including;

1. Cost efficiency: Significantly reducing the volume of paper to be handled and re keyed results in immediate savings in administrative and personnel costs. Staff can be redeployed to other more value-add functions within the organization.
2. Increased speed: Large volumes of commercial data can be communicated from one computer to another in a matter of minutes, enabling faster response and greater customer satisfaction.
3. Improved accuracy: EDI eliminates the inevitable errors resulting from manual data input.
4. Better logistics management and increased productivity: EDI enables companies to better manage and control production, purchasing and delivery requirements. EDI is a key component of justintime manufacturing and quick response customersupplier links, resulting in significant reductions in inventory levels.
5. Improved Customer Relations: EDI eliminates delays in invoice processing & postage, thus resulting in a faster order to cash cycle.

The benefits of EDI are:

  • Reduced operational costs
  • Faster receiving and storing of goods
  • More accurate data; fewer order, delivery and invoice queries
  • Improved stock accuracy and availability
  • Shorter lead time from order to payment
  • Better trading relationships

Cost Benefit Study

The Irish Hardware & Buildings Materials Association (IHBMA) and GSI Ireland have, been working with a representative group to oversee the industry-wide agreement, adoption and rollout of a standard EDI message. The group, comprised of 5 suppliers and 5 retailers from the sector, has recently completed the successful pilot implementation of a standard EDI invoice message based on the latest EANCOM 2002 -specification and is currently working on purchase order message.  The group aims develop messages as required by the sector and plan a roll out to more suppliers and retailers in the coming months. 

For a Supplier, switching to EDI means that less time is spent printing and posting invoices. Instead, invoices can be prepared on-line and despatched using Global Location Numbers (GLNs) to Retailers. When EDI is implemented the projected average monthly cost reduces to €400 – a saving of €1,300 or over 75%.

For a Retailer, the potential savings are even greater. With less time spent receiving, scanning, verifying, checking, etc. invoices arrive via EDI directly to the Retailer where they can be processed on-line and payments made. In this case the projected average monthly cost reduces to €500 - a saving of €4,000 or about 90%.

The Payback from EDI

Probably the biggest consideration involving a move to EDI relates to the Return on Investment (ROI) and payback. As has been already shown, there are significant savings to be made to the monthly costs once EDI has been implemented. The ROI for any company will be determined by the actual cost of setting up and implementing an EDI system. In a recent GS1 Ireland survey, payback on set-up cost was attained in ten months for Suppliers and only six weeks for Retailers.

The Four Processes are: Align, Order, Deliver and Pay

GS1 Share EDI SimplifiedSince 1992, the Irish EDI Retail Model has evolved based on the individual priorities of the Hub companies. Today, however, if you take a bird's eye look at the EDI model it would look like that outlined below.

  1. Order Processing
  2. Invoicing
  3. Data Alignment

Order Processing

Order Processing has been implemented using the Purchase Order and the Purchase Order Response Message. These Purchase Order Messages have been designed to cater for a wide variety of Supply Chain Models:

  • Direct Store Delivery
  • Central Distribution
  • Transshipment Orders via a Central Warehouse
  • Cross Dock Orders via a Warehouse

Priced Purchase Orders for each of the above.

The Order Response Message has been designed to:

  • Acknowledge the receipt of the order
  • Confirm that deliveries will be made as per the requirements of the original order.
  • Detail amendments and the reasons for changes

The Despatch Advice message is used to detail the actual delivery to be made. This message replaces the paper version of the delivery note. The present implementation of the Dispatch Advice is limited to a single environment.

Invoicing

The Invoice Message has been designed to support three business models used in Ireland:

  • Standard Invoice for a single order/delivery
  • Consolidated Invoice covering a period of time and multiple deliveries
  • Central Billing Invoice

In all cases, the EDI messages have been designed to comply with the VAT regulations governing both paper and EDI Transactions. It should be noted that the legislation governing VAT and EDI transactions, SI 269 of 1992 will be with drawn in 2002 and replaced with new legislation. The new legislation takes into consideration the European Union VAT Harmonisation and Electronic Signature directives and adopts the S.I. 269 accordingly so that there is a compatibility between Web Developments and at the same time not impacting on existing EDI implementations.

The Tax Control Message is a specific EDI message required by the VAT Regulations SI 269 of 1992. This message summarised the VAT amounts in an EDI Invoice file containing many EDI invoices. In the new regulations, the requirement for this message is removed. However, feedback from the current users indicates that they are unlikely to stop using it as it seen as a good control mechanism for management of the EDI message process.

Data Alignment

Data alignment has been implemented using the Price Catalogue Message and the Price Catalogue Response Message. Data Alignment involves the sharing information about product specifications and prices necessarily to run various applications such Warehouse Management Systems, Order Processing Systems and Accounts Systems. This is maintaining over the life cycle of the product to ensure that all data is accurate at all times.

Data alignment presently takes place bilaterally, i.e., directly between supplier and retailer. However, recognising that certain information about products is not confidential and is static over the life cycle of the product, there is a increasing trend towards providing this information from a global central repository a central catalogue using both EDI and Web EDI technology.

Visit the GDSN section of this website for further information on data alignment solutions.

GS1 manages two standards for the exchange of transactional data; these are EANCOM and GS1 XML. Both are widely used throughout the world by thousands of companies of all sizes in many different sectors. In GS1 standardised EDI messages each product, trading partner and location is identified by a unique GS1 Identification Number. These identification numbers are often represented in barcode symbols, which when scanned create a link between physical goods and locations and the digital information about them.

The Irish Grocery Sector has been using eCom messaging for the past 18years, today 90% of Invoices in the grocery sector are transfered using EDI. EDI is a secure stable proven technology.  The Irish Hardware/DIY Sector has recently completed the successful implementation of a standard EDI Invoice message.  There is huge opportunity and potential for all Irish Industry sectors to increase efficiency, save money and improve their carbon footprint by implementing EDI.

GS1 eCom standards make full use of GS1 Identification Numbers. The most commonly used GS1 Identification Numbers used in EDI are:

  • GTIN (Global Trade Item Number), which identifies all products and services
  • GLN (Global Location Number), which identifies all parties (buyer, seller and any third parties involved in the transaction) and all physical locations
  • SSCC (Serial Shipping Container Code), which identifies all logistics units

The use of GS1 Identification Numbers in EDI messages enables the physical flow of goods to be related to the information sent by electronic means.

GS1 EANCOM

EANCOM is the traditional standard used in Ireland since 1991 based on UN/EDIFACT (United Nations Electronic Data Interchange for Administration, Commerce and Transport).  The current recommended version EANCOM 2002, this standard has been named H-EDI in Ireland. This standard is very stable and is widely adopted in the FMCG sector and is growing in DIY/Hardware.

GS1 XML

XML, or eXtensible Markup Language, has been specifically designed for information exchange over the internet. GS1 XML standards are not meant to compete with or replace GS1 EANCOM – the GS1 standard for more traditional, VAN-based EDI. GS1 XML standards initially addressed user groups different from those using GS1 EANCOM standards, but now currently both approaches are being used in parallel.

Electronic Data Interchange is not new. Some companies have been using proprietary formats since the late 1960's. However, if EDI implementation is to remain cost efficient, trading partners must share a common language for their business and commercial messages.

In the mid 1970's, sectoral EDI standards emerged in a number of countries, which sometimes in turn led to the development of national standards. It became clear that if EDI was to meet the requirements of the global business community, an international multiindustry EDI standard was needed.

By the mid 1980's the development of an EDI standard began taking shape within the United Nations. The standard is known today under the acronym UN/EDIFACT, in full: United Nations Electronic Data Interchange for Administration, Commerce and Transport.

In 1987, the syntax or grammar of UN/EDIFACT was approved as ISO standard 9735. UN/CEFACT is the United Nations Centre for Trade Facilitation and Electronic Business. The centre's objective is to develop recommendations and standards such as UN/EDIFACT to facilitate trade.